Do you know your yield curve from your dilution levy or your benchmark from your systematic risk? No, well you’re not alone. The investment industry is awash with jargon, so here’s our festive attempt to demystify it all. Pop on your Christmas jumper, ladle yourself some mulled wine and test your knowledge against our merry list of financial terms. Everyone loves a Christmas Quiz!
Only, hang on… What’s this? This isn’t right. Who’s filled this one in? Nooo! It’s the Christmas Elves again!
M Mean reversion: When you can’t be bothered buying any presents; Market, Value, Small: hopefully not to be heard too much from the kids round the Christmas tree.
E Exchange Rate: the kids’ll work it out; Efficient Frontier: when you get the pots and pans washed in double-quick time so you can flake out on the sofa.
R Relative risk: when you put Aunt Bessie next to Uncle Reg despite them having not spoken to each other for 20 years; Rollover Risk: inversely proportional to the reduction of daylight.
R Research Analyst: Uncle Billy’s been reading the trivia books again as he dazzles everyone with his uncanny knowledge of Oscar nominees; Receipt: you did keep it, didn’t you?
Y YAWN (Young and Wealthy but Normal): Says who? Yield Curve Risk: imminent threat to waistline (see also Yield Spread, Inflation).
C Crown Rating: how well your dental work holds up to the cremated pigs in blankets; Cashflow: only going in one direction this time of year.
H Head and Shoulders Pattern: can be avoided with the right shampoo; Hedge Clause: red hat with white pom pom sticking out of privet hedge after nasty fall from ice-covered roof (see also Slippage).
R Reserve Currency: in the tea caddy… nope, sorry, nothing; Recovery Rate: slooooow.
I Inflation: You’ll need to join the returns queue after Christmas to swap that for a bigger size (see Yield Spread, Yield Curve Risk, etc); Interest Rate Swap: not too high hopefully if you got your presents right;
S Stamp Duty: the person who stands by the door when the kids come in from the snow; Stock Control: you know, to add to the gravy (steer clear of Floating Stock).
T Tactical Asset Allocation: making sure everyone gets presents of equal value; Triple Bottom (Double Bottom, etc): unavoidable with all that sitting on the sofa; Taper Relief: when you find that third candle at the back of the drawer just before your guests arrive.
M Modern Portfolio Theory: The young’uns have a different view of how many presents constitutes an acceptable ‘haul’. Market Failure: ropey vegetables, rubbish stocking fillers, you paid what??!
A Anti-Dilution: no water jugs on the table; Asset Mix: a few bowls for nibbles; Average Life: so, there you all are, sitting at the Christmas table, and you look around, and you think…
S Stock picking: whether you use the juices from the turkey or one of these fancy new pots; Small caps: the kids will need these to go and play in the snow.
We wish you all a Very Happy Christmas!
Love the Carbon Elves xxx